• Commenting in Dairygold` s Annual Report Chief Executive, Jim Woulfe, said of 2011 “The Society generated an Operating Profit of €22.6m a 19.6% increase on 2010 attributable to increased milk volumes combined with positive market sentiment, optimised product and customer mix, improved operating efficiencies and continued benefits from restructuring and investment.”

•  A recent Irish Business Survey in search for the best performing Irish organisations placed Dairygold third out of the top 101 largest and most visible organisations in Ireland.

• Dairygold Food Ingredients have had a long and successful business in China for over a decade with particular focus on the Infant Nutrition industry.   “Dairy ingredient sales are growing by 16 per cent per annum, and the estimated size of the market is 450,000 tonnes” – Kieran Evans, International Sales Manager explains.  Dairygold is one of the leading world suppliers of a specialised ingredient called “Demineralised Whey”, which is the key ingredient within infant formula. The region offers exiting growth opportunities for Dairygold and we were pleased to recently attend a Trade mission organised by Enterprise Ireland with Prime Minister Enda Kenny as guest of honour.

The ending of quotas in Ireland offers Dairygold its first real opportunity in more than 30 year for substantial dairy growth.

The capacity expansion would allow Dairygold to process an extra 23 million litres of milk per week, in addition to its current peak of 30 million litres per week.

Mr Woulfe said the Dairygold team is excited about the opportunities and confident about the company`s ability to process and market up to 50% increase in milk production by 2020.

The show will be an opportunity for Dairygold Food Ingredients to display our full range of Cheese Solutions offering which includes our natural hard cheese, liquid/cream cheese offering and processed cheese as well as focusing on our Consumer Foods offering of Irish speciality cheeses under Irish Land™ brand.

Visitors will also have an opportunity to find out more about our latest innovations in cheese powders and flavour blends. These product concepts are manufactured from carefully selected ingredients and marketed under our taste...Discovering flavour™ brand. Flavour and functionality are the critical product attributes designed to boost flavour or replace cheese/dairy in a wide variety of savoury and sweet applications.

Alimentaria is one of the most important  food and drinks trade shows in the World and the most important one in Spain. The last Alimentaria 2010 exhibition has seen 140.542 visitors and 3.900 food companies exhibiting.

Please visit our stand and discover all our latest developments.

For further information, please contact to us at:
Dairygold Food Ingredients
Avda. Meridiana, 354 , 10a
08027 Barcelona
dfi-spain@dairygold.ie
Tel: +34 93 346 37 96 

Mr Lynch supplies his milk to Dairygold, Ireland’s largest co-operative milk processor, which in turn provides the raw ingredient for a wide range of Dairygold Food Ingredients products.

Dairygold Food Ingredients exports some of the key ingredients for infant formula to China and James was proud to demonstrate the link between his farm and the quality product Dairygold supplies to Chinese consumers. In 2011 Dairygold Food Ingredients became the leading supplier to the Chinese market of demineralised whey, a key ingredient of infant formula. Dairygold began trading with China ten years ago in 2001. Over the intervening period sales have grown considerably involving - Demineralised Whey Powders, Whey Protein Concentrates (WPC’s) and Specialised Milk Powders, which are mostly used in Infant formula.

Ireland’s single biggest food export to China is infant formula, and was worth €85 million in 2010. Ireland is also the largest exporter of infant formula in the world, producing over 15% of the total global supply annually.

Mr Lynch is also currently Vice Chairman of the Board of Dairygold Co-Operative Society and in this capacity, he visited China in November 2011 as part of a Dairygold Trade Mission to the country, where he was one of the invited guests at a special dinner hosted at the Great Hall of the People in Tiananmen Square by the China Dairy Association.

James’ farm is 87 hectares in size and supports a herd of 120 pedigree Friesian dairy cows, as well as a smaller herd of beef cattle. The farm is located 1.5km outside the village of Sixmilebridge in County Clare, in the south-west of Ireland.  The Lynch family have been farming this land for eight generations, stretching back almost 400 years. James took over the farm business from his father in the early 1990s. Today, as he runs the farm with the support of his wife. They have three young children: James (aged 5), Olive (3) and Ronan (8 months); and James’ mother Ann also lives with the family. The Chinese leader enjoyed tea and light refreshments with the family that morning following his tour of the farm itself.

The Vice President will leave a special namesake behind him in Ireland following his visit to the farm as Mr Lynch informed the Chinese leader that the Friesian heifer calf born on the farm the night before the visit will be called after him. 

“Like other processors the ending of quotas offers Dairygold its first real opportunity in over 30 years for substantial Dairy growth. In Dairygold our team are excited about the future opportunities and confident about our ability to process and market up to a 50% increase in milk production by 2020.”  Mr Woulfe said.

Elaborating on the Co-op’s efforts to prepare for the expected post quota milk production expansion Mr Woulfe said;

“Our priority objective over the last year of intensive analysis has been to identify the most efficient and cost-effective post quota processing strategy for the business taking into account product returns. Effectively we are seeking the optimum solution for our members. We have and continue to investigate a variety of possibilities in that regard, including stand alone and co-operative efforts.

“We have also focussed on scenarios that can facilitate an incremental expansion in processing capacity to meet the growth in milk volumes. This would give us the flexibility to engage in a careful and phased investment in processing infrastructure. We do not want to waste farmers’ money and with a phased approach our Members can be confident that their investment will be cautiously measured and aligned to definite increases in milk deliveries.”

Mr Woulfe told attendees that the starting point for Dairygold’s evaluations was a commitment to accept and process all milk delivered by its Members in line with supplier agreements post quota. The Co-op was currently in the process of analysing the data from a comprehensive survey of its milk suppliers’ projections on milk output expansion carried out in January.

“While we are still collecting and collating data, the initial findings indicate an increase in excess of 50% in milk production by Dairygold suppliers up to 2020, comprising of a 22% increase in the combined years 2014/2015 followed by a projected growth of approximately 5% in each of the five following years to 2020. Most importantly milk expansion will provide Dairygold milk suppliers with additional income. At current milk prices Dairygold potentially will be paying an additional €160 million annually to its farmers by 2020. This income will have a significant knock on multiplier effect on the wider economy, especially in Munster.”

Mr Woulfe re-iterated the Dairygold plan to have the processing capacity in place for the initial surge in milk deliveries in 2014/2015 but warned suppliers that producing over their individual quota limits is not advised and will incur a substantial EU levy.

“Dairygold’s product strategy is firmly established in cheese and dairy ingredients. Our Cheddar and Whey facilities in Mitchelstown are well invested and delivering scale and efficiency. The latter facility supplies much of our ingredients portfolio including our higher value infant nutrition Ingredients. It’s located on a site of some 60 acres with planning in place for expansion.”

“Milk-drying facilities seem to offer the most economically advantageous and beneficial option to deliver post quota processing capacity. Drying offers flexibility, it can be built up gradually in a modular fashion and it allows for the production of a variety of products including Whole Milk Powder, Infant Milk Formula Base and Fat Filled Milk Powder. In Dairygold it has the added attraction of fitting into our ambitions for expansion in the supply of speciality dairy ingredients to the IMF sector.”

“In the meantime our Mallow site is an excellent brown field site of 22 acres which would facilitate a major processing expansion.  Mallow has a long tradition in the production of milk powders and would be an ideal location for additional drying capacity where the infrastructure already in place would reduce the capital cost of significant expansion.”

“Sweating our existing assets makes absolute sense for Dairygold as they offer established infrastructure with significant potential – road networks, water, electrical power stations, natural gas, effluent plants, etc. Whatever about the requirement for new build, we see further collaborations in milk processing as being essential in order to maximise efficiency and avoid unnecessary capital spend.”

“Right now the conclusion of our planning for post 2015 is firmly on top of the Board and management priorities and we will have a plan formally concluded in the coming weeks. However, the availability of a cost effective Dairygold solution places the organisation in the fortunate position of having a benchmark against which all other proposed options and solutions can be adjudicated.” He confirmed.

On marketing of the additional dairy product Mr Woulfe said; “The Irish Dairy Board is a very effective sales and marketing arm for a substantial proportion of Irish milk processors’ output. The Kerrygold brand has a real competitive advantage and the Board’s sales capability reaches all the major developing economies that are recognised as growth markets. Dairygold has been working closely with the IDB to develop that organisation’s strategic growth plan which aims to increase Irish dairy exports by leveraging its international brands and building new routes to value and growth markets. Dairygold’s own commercial team will continue to be firmly focussed on selected key markets/customers where speciality products with a B2B focus will be further developed and grown.

In relation to financing milk expansion at processing level Mr Woulfe said,

“Inevitably, expansion will require funding, specifically capital investment in processing capacity.  In seeking to secure that funding we will look at all possible stakeholders in whatever configuration evolves as the best option, including our own resources, bank lenders, business partners, milk suppliers and the Government.

 “However, our approach will seek to minimise the impact on our milk suppliers.  A revolving fund is a structure that has worked well in the co-operative sector in the past and we are looking closely at this option. The impact on members would be minor and incremental while the repayment will include an interest top-up. The appropriate safeguards can be built in to protect supplier income in a volatile market.”

On the issue of Milk Supply Contracts with milk suppliers Mr Woulfe confirmed,

“Milk volume forecasting will be essential to ensure appropriate cost-effective milk processing. Therefore I believe that it will be necessary to have in place milk supply agreements/ contracts in order to ensure security and predictability of supply. It is likely that a post quota scenario would see each milk supplier being required to forecast milk supply volumes on a rolling year basis. Allied to this, I believe there will be a requirement for a Quality Assurance Scheme at farm level as it will become an important element in driving higher value customer and product specification.”